APPLIED MECHANISM DESIGN FOR SOCIAL GOOD

Transcription

1 APPLIED MECHANISM DESIGN FOR SOCIAL GOOD JOHN P DICKERSON Lecture #17 10/25/2016 CMSC828M Tuesdays & Thursdays 12:30pm 1:45pm

2 THIS CLASS: INCENTIVE AUCTIONS PART I: JOHN DICKERSON PART II: FAEZ AHMED Thanks to: CMU , Priceonomics, US Department of Commerce, Wikipedia 2

3 ALLOCATING SPECTRUM Radio spectrum is a finite natural resource Interference issues, not infinitely divisible Bands are heterogeneous but similar Bands support different levels of data transfer Bands support different levels of transfer clarity FCC allocates bands of spectrum to various industries and firms within those industries; wants: Efficiency aka maximize social welfare? Revenue/Profit maximization? Practice: can improve both over, e.g., lotteries 3

4 IO NS & INFORMATIO N ADMINISTRAT S) 3 9 UNITED STATES THE SPECTRUM NOT ALLOCATED khz 300 khz 300 Aeronautical Radionavigation (Radio Beacons) ( BEACONS) TRAVELERS INFORMATION STATIONS (G) AT 1610 khz 300 khz 3 MHz (R) (OR) 3 MHz * ( BEACONS) Aeronautical Maritime Radionavigation (Radio Beacons) 335 ** (R) ( BEACONS) Aeronautical Aeronautical Aeronautical Radionavigation * (R) (OR) 4.75 * (DISTRESS AND CALLING) ( BEACONS) (SHIPS ONLY) STANDARD FREQ. AND TIME SIGNAL (5000 KHZ) STANDARD FREQ. Space Research ( BEACONS) 535 ** (R) (OR) * (R) (OR) (R) (OR) 88.0 (AM ) STANDARD FREQ. AND TIME SIGNAL (10,000 khz) STANDARD FREQ. Space Research (R) * (OR) (R) (OR) (R) ASTRONOMY * * STANDARD FREQ. AND TIME SIGNAL (60 khz) * STANDARD FREQ. AND TIME SIGNAL (15,000 khz) STANDARD FREQ. Space Research (OR) (R) (OR) STAND. FREQ. & TIME SIG. Space Research STANDARD FREQUENCY & TIME SIGNAL (20,000 KHZ) STANDARD FREQ. Space Research (TELEPHONY) 2107 LAND (R) (TELEPHONY) (DISTRESS AND CALLING) (TELEPHONY) * (OR) 190 LAND ** STANDARD FREQ. AND TIME SIGNAL (25,000 khz) STANDARD FREQ. Space Research STANDARD FREQ. AND TIME SIGNAL (2500kHz) 2501 Space Research STANDARD FREQ STANDARD FREQ. AND TIME SIGNAL LAND LAND LAND ** ASTRONOMY LAND ** ** ** LAND ISM 6.78 ±.015 MHz ISM ±.007 MHz ISM ±.163 MHz Maritime Radionavigation (Radio Beacons) Aeronautical Radionavigation (Radio Beacons) Aeronautical ( BEACONS) (R) LAND MHz 300 SERVICES COLOR LEGEND LAND ASTRONOMY DETERMINATION LAND LAND LAND LAND Radio Astronomy LAND ASTRONOMY LAND LAND LAND (TV CHANNELS 2-4) ASTRONOMY (TV CHANNELS 5-6) (FM ) (R) (R) (R) (R) (R) MOB. SAT. RES. OPN. MET. SAT. Mob. Sat. RES. OPN. MET. SAT. MOB. SAT. RES. OPN. MET. SAT. Mob. Sat. RES. OPN. MET. SAT. NAV- LAND LAND LAND LAND LAND Land (TV CHANNELS 7-13) Fixed LAND LAND 30 MHz ISM ±.02 MHz 300 MHz FX FX FREQUENCY ALS * Fixed STANDARD FREQ. AND TIME SIGNAL (20 khz) Aeronautical LAND LAND LAND Earth Expl Sat Met-Satellite EXPL SAT. MET-SAT. MET. AIDS (Radiosonde) METEOROLOGICAL AIDS (SONDE) ASTRONOMY RESEARCH (S-S) LAND LAND LAND LAND Meteorological Satellite LAND LAND LAND LAND LAND LAND (TV CHANNELS 14-20) (TV CHANNELS 21-36) ASTRONOMY LAND TV BROADCAST BROADCAST BROADCAST LAND LAND LAND LAND LAND LAND LAND LAND LAND LAND LAND ** -SAT ** LAND ASTRONOMY EXPL SAT SPA CE RESEARCH ( Passive) LAND Fixed (TLM) LAND (TLM) (TLM) -SAT (TLM) LAND (TLM) ** ( TELEMETERING) SAT. ** (Space to Earth) SAT. SAT. (Space to Earth) (Space to Earth) (Aero. TLM) (space to Earth) (R) (space to Earth) Satellite (S- E) (R) (space to Earth) (Space to Earth) (R) (space to Earth) NAV. (Space to Earth) AERO. DET. SAT. SAT AERO. NAV. DET. SAT. SAT. ASTRONOMY AERO. NAV. DET. SAT. SAT. Sat. ASTRONOMY SAT. ASTRONOMY RESEARCH METEOROLOGICAL ASTRONOMY AIDS (SONDE) ** METEOROLOGICAL METEOROLOGICAL (s-e) AIDS (Radiosonde) Fixed MET. SAT. (s-e) RES. EXPL. OP. (s-s) SAT. (s-s) (s-s) MOB. FX. (LOS) RESEARCH OPERATION (LOS) (s-e)(s-s) (s-e)(s-s) SAT. (s-e)(s-s) RES.. ** ** Fixed MOB R- LOC. B-SAT STD. FREQ. & TIME SIGNAL SAT. (400.1 MHz) MET. AIDS. RES. Space Opn. MET. SAT. (Radiosonde) SAT. MET. AIDS Earth Expl. (Radiosonde) Satellite OPN. MET-SAT. EXPL Met-Satellite Earth Expl Sat SAT. Fixed BCST- Fixed MOB R- LOC. B-SAT Fixed DETERMINATION SAT. BCST - SAT. ** FX-SAT (S - E) E-Expl Sat Radio Ast Space res. MOB** B- SAT. FX FX-SAT ASTRON. RESEARCH EXPL SAT METEOROLOGICAL AIDS METEOROLOGICAL AIDS OPERATION MHz ISM ± 13 MHz ISM ± 50 MHz GHz METEOROLOGICAL RESEARCH STANDARD FREQUENCY AND TIME SIGNAL STANDARD FREQUENCY AND TIME SIGNAL ** SAT. ** ASTRONOMY Space Research AERO. NAV. SAT (Ground) AERO. SAT. NAV.(Ground) NAV. METEOROLOGICAL AIDS - sat (s-e) SAT SAT RESEARCH Fixed Satellite MET. Satellite Satellite Fixed EXPL. Satellite EXPL. MET. SAT. Satellite (no airborne) EXPL. Satellite (no airborne) RESEARCH (deep space only) RESEARCH Meteorological Aids EXPL. ASTRONOMY RESEARCH ** Satellite RESEARCH EXPL. SAT. ASTRONOMY RESEARCH (Deep Space) NAV. Space Research Standard Freq. and Time Signal Satellite SAT. Space Research Land Satellite SAT. Space Research Land Satellite ** Land Satellite SAT. Fixed Fixed FX SAT. L M Sat Space Research Fixed Space Research Space Research ASTRONOMY RESEARCH EXPL. SAT. AERO NAV SAT Space Res.(act.) Earth Expl Sat Space Res. LOC. Radioloc. BCST SAT. FX SAT RES. FX SAT EXPL. SAT. SAT. FX SAT STD FREQ. & TIME FX SAT SAT RES. EXPL. SAT. ** RAD.AST ** EXPL. SAT. RES. ASTRONOMY RES. EXPL. SAT. Earth Expl. Satellite (Active) Earth Expl. Satellite (Active) Earth Standard Exploration Frequency and Satellite Time Signal (S-S) Satellite Earth std Exploration freq e-e-sat SAT. & Satellite time (S-S) e-e-sat (s-s) SAT. Earth Exploration Satellite (S-S) SAT ACTIVITY CODE 3 GHz ISM 5.8 ±.075 GHz ISM ± GHz GHz GOVERNMENT EXCLUSIVE GOVERNMENT/ NON-GOVERNMENT SHARED NON-GOVERNMENT EXCLUSIVE AL USAGE DESIGNATION SERVICE EXAMPLE DESCRIPTION Primary Capital Letters Secondary 1st Capital with lower case letters Standard Frequency and Time Signal Satellite Stand. Frequency and Time Signal Satellite ASTRONOMY 30 GHz SAT. RESEARCH RESEARCH (deep space) SAT RES. RE. EXPL.. SAT. RESEARCH (space-to-earth) RES. SAT. - SAT. ** ASTRONOMY NAV. SAT. NAV.SAT. MOB. SAT FX SAT FX SAT RESEARCH FI XED RESEARCH SAT EXPL-SAT SAT RES. -ES RES. -ES SAT - SAT SAT. RESEARCH SAT. RES. INTER RES. RES.. SAT. Earth Expl. EXPL SAT SAT. RES. Sat (s - e) SAT BCST BROAD- FX-SAT Fixed SAT. CASTING BROAD- BCST CASTING SAT. SAT LOC. ** ISM ±.250 GHz GHz IS DESIGNATED FOR UNLICENSED DEVICES ** RESEARCH LOC. LOC. Sat. LOC. SAT Satellite BROAD- CASTING RESEARCH ASTRONOMY BROAD- CASTING RESEARCH EXPL. RESEARCH ASTRONOMY EXPL SAT. RESEARCH Amatuer EXPL SAT. MO- E A R T H BILE SAT. RES. EXPL. SAT RESEARCH ISM ±.500 GHz Satellite RES. EXPL. SAT. RES. ASTRONOMY RESEARCH SAT. RESEARCH ASTRONOMY SAT. RES. RESEARCH ASTRONOMY ISM ± 1GHz RES. EXPL. SAT. Satellite RES. ASTRONOMY 300 GHz * EXCEPT AERO (R) This chart is a graphic single-point-in-time portrayal of the Table of Frequency Allocations used by the FCC and NTIA. As such, it does not completely reflect all aspects, i.e., footnotes and recent changes made to the Table of Frequency Allocations. Therefore, for complete information, users should consult the Table to determine the current status of U.S. allocations. NAT U.S. DEPARTMENT IONAL TELEC O MM UNICAT OF COMMERCE IO N U.S. DEPARTMENT OF COMMERCE National Telecommunications and Information Administration Office of Spectrum Management October 2003 ** EXCEPT AERO WAVELENGTH BAND DESIGNATIONS ACTIVITIES FREQUENCY 3 x 10 7 m 3 x 10 6 m 3 x 10 5 m 30,000 m 3,000 m 300 m 30 m 3 m 30 cm 3 cm 0.3 cm 0.03 cm 3 x 10 5 Å 3 x 10 4 Å 3 x 10 3 Å 3 x 10 2 Å 3 x 10Å 3Å 3 x 10-1 Å 3 x 10-2 Å 3 x 10-3 Å 3 x 10-4 Å 3 x 10-5 Å 3 x 10-6 Å 3 x 10-7 Å VERY LOW FREQUENCY (VLF) LF MF HF VHF UHF SHF EHF INFRARED VISIBLE ULTRAVIOLET X-RAY GAMMA-RAY COSMIC-RAY Radar C P L S X Audible Range AM Broadcast FM Broadcast Bands Radar Sub-Millimeter Visible Ultraviolet Gamma-ray Cosmic-ray Sonics Ultra-sonics Infrared Infra-sonics Microwaves X-ray 0 10 Hz 100 Hz 1 khz 10 khz 100 khz 1 MHz 10 MHz 100 MHz 1 GHz 10 GHz 100 GHz 1 THz Hz Hz Hz Hz Hz Hz Hz Hz Hz Hz Hz Hz Hz THE SPECTRUM 3 khz MAGNIFIED ABOVE 300 GHz PLEASE NOTE: THE SPACING ALLOTTED THE SERVICES IN THE SPEC- TRUM SEGMENTS SHOWN IS NOT PROPORTIONAL TO THE ACTUAL AMOUNT OF SPECTRUM OCCUPIED. Source: US Department of Commerce 4

5 PRE-1980S: AL BY COMMITTEE Interested firms present to an FCC committee Pros: Inherently multi-objective Firms explicitly make a case for the public welfare Cons: No revenue for the FCC Not a transparent mechanism Potentially high labor cost / slow speed Manipulate via backchannelling, bribery, etc. 5

6 THE 1980S: LOTTERIES Firms apply in advance and are accepted by the FCC FCC allocates band licenses via lottery Pros: Fair anyone can win regardless of money Simple and transparent Rent-seeking: firm asks for more than it needs Resell to other firms for profit Negotiations take forever à unused spectrum Efficiency issues 6 Cons:

7 THE FAR FUTURE: SPOT MARKETS What about immediate (re-)allocation of spectrum? Already exist: spot energy markets Some agents produce surplus energy Some agents require extra energy Market matches supply/demand immediately What about a spot spectrum market? Hardware isn t there yet Carriers make huge investments in infrastructure for specific bands of spectra long-term licenses good here Flexible hardware à spot market that prices bandwidth for a specific location and time à more efficient (someday) 7

8 THE HERE AND NOW: SPECTRUM & INCENTIVE AUCTIONS Rent-seeking & speculation on lotteries in the 1980s and 1990s publicized that the FCC was giving away a valuable commodity: 1993: US Congress tells FCC to implement auctions Prior fielded large-scale auctions: English (ascending) or Dutch (descending), and bidding on single items The value of a band to a firm is a function of whether or not the firm gets neighboring bands, or what other firms are dong with neighboring bands (interference!) Complementarities and substitutes amongst bands 8 This was a new problem!

9 THE HERE AND NOW: SPECTRUM & INCENTIVE AUCTIONS Exposure problem: Not sure how much firm will spend à firms underbid Firms can spitefully buy up a single area (e.g., NYC) knowing that a competitor has a nationwide buy plan à artificially increase prices Solution: combinatorial auctions, multi-clock auctions, etc. Implemented solution: Simultaneous ascending (fixed increments) auctions Firm #1 bids $100k on DC, Firm #2 bids $130k on DC and Chicago in one round; both firms see highest bids in each location, can adjust next bids accordingly 9

10 COLLUSION Firms know that the FCC has some incentive to maximize revenue Possible workaround: backchannel aka collude to reduce competition Explicitly illegal Witnessed in the 1996: Mercury PCS, Omnipoint, 21 st Century Bidding Corp encoded license area codes into the insignificant digits of their bids E.g., Mercury PCS bids $100,000,486 to signal to competitors to stay out of license area code 486 Settled with the FCC in 1998 More info: 10

11 Now used worldwide, also for energy, other resources! Source: FCC data and Priceonomics 11

12 THE HERE AND NOW: SPECTRUM & INCENTIVE AUCTIONS Previously: FCC owned chunks of spectrum, gave them out to interested parties via chat, lottery, auction Currently: we re all out of spectrum à nothing to allocate! Need to re-allocate spectrum from old tech to new tech: Forward auction: buyers compete to buy goods (prices increase) Reverse auction: sellers compete to sell goods (prices decrease) Incentive auction: 1. Reverse auction to incentivize old firms to relinquish broadcast rights to the FCC, aka sell their goods to the FCC 2. Forward auction sells rights to new firms 12

13 FCC INCENTIVE AUCTION Forward Auction Applications Forward auction bidding No Final rule? No Yes Forward auction final channel assignment Reverse auction bidding Bidding stopped? Yes Forward auction bidding Forward auction bidding Reverse Auction Applications Set clearing targets & constraints No Reverse auction final channel assignment Clock Phase Final rule? Yes Assignment Phase 13

14 REVERSE AUCTION Initial iteration started in March 2016, ended June 2016! FCC is now the proud owner of 126 MHz of spectrum for the measly sum of US$86.4 billion! FCC didn t actually pay; just holding onto it for forward auction It s possible that they paid too much, might have to redo How did they get this? Faez will talk about details! 14

15 FORWARD AUCTION Ascending auction: Not open cry, rather ascends in fixed increments (5-15%) Bidders reveal how many units they would buy at this price Constraints put on bidders based on previous rounds (activity rule) Various types of bids, e.g.: All-or-nothing: satisfy entire bid or give me nothing Switch bids: move demand from one generic spectrum band to another one If demand < supply, or prices won t cover reverse auction: Increase price in high-demand areas until bidders drop out If bidding stops & clearing target accomplished & profitable: finish! 15

16 THE DOUBLE AUCTION $ Price paid by buyers Price paid to sellers Revenue for US Treasury Spectrum Cleared Bids from television broadcasters generate a supply curve for spectrum that can be cleared. Bids from wireless companies generate a demand curve for newly free spectrum MHz 16

17 NEXT UP: SOLVING THE REPACKING PROBLEM 17 PRESENTER: FAEZ AHMED